A recent analysis done by Merryl Lynch states that PS3 will be more costly than Xbox 360 at its launch, and will continue to operate at a cost disadvantage for several years.
Sony's PS3 is a decent machine but the components that are used to make one are very costly. The Investment Banking major estimated PS3 to cost around US$500 by its launch time which is in 2006. By that time Xbox 360 will cost something like US$249. So it makes pretty obvious that users are going to prefer a Xbox 360 over PS3.
I am now looking forward to see some real action in this ongoing Console War. For the moment Microsoft Corp. is truly having more than an edge over Sony.